(Operator Instructions) Welcome to the Johnson & Johnson First Quarter 2010 Earnings Conference Call. I would now like to turn the conference call over to Johnson & Johnson.

Louise Mehrotra

I’m Louise Mehrotra, Vice President of Investor Relations for Johnson & Johnson and it is my pleasure this morning to review our business results for the first quarter of 2010. Joining me on the call today are Dominic Caruso, Vice President, Finance and Chief Financial Officer.

A few logistics before we get into the details. This review is being made available to a broader audience via a webcast accessible through the Investor Relations section of the Johnson & Johnson website. I’ll begin by briefly reviewing highlights of the first quarter for the Corporation and highlights for our three business segments. Following my remarks Dominic will provide some additional commentary on the first quarter financial results and guidance for the full year of 2010. We will then open the call to your questions. We expect the call to last approximately one hour.

Included with the press release that was sent to the investment community earlier this morning is the schedule showing sales for major products and/or business franchises to facilitating updating your models. These are available on the Johnson & Johnson website as is the press release.

Before I get into the results let remind you that some of the statements made during this call may be considered forward looking statements. The 10-K for the fiscal year 2009 identifies certain factors that could cause the company’s actual results to differ materially from those projected in any forward looking statements made this morning. The company does not undertake to update any forward looking statements as a result of new information or future events or developments. The 10-K is available through the company or online.

Last item, during the call, non-GAAP financial measures may be used to provide information pertinent to ongoing business performance. These measures are reconciled to the GAAP measures and are available in the press release or on the Johnson & Johnson website.

Now I would like to review our results for the first quarter of 2010. If you would refer to your copy of the press release, let’s begin with the schedule titled supplementary sales data by geographic area.

Worldwide sales to customers were $15.6 billion for the first quarter 2010 up 4% as compared to the first quarter 2009. On an operational basis, sales were essentially flat and currency had a positive impact of 4.1%. In the US sales declined 5%. In regions outside the US our operational growth was 5.5% while the affect of currency exchange rates positively impacted our reported results by 8.9 points. Our strongest performing region was the Asia/Pacific/Africa region which grew 7.8% on an operational basis. Europe grew 4.6% operationally while the Western Hemisphere excluding the US grew by 3.5% operationally.

If you’ll now turn to the consolidated statement of earnings, net earnings on a reported basis were $4.5 billion compared to $3.5 billion in the same period in 2009 an increase of 29.1%. Earnings per share were $1.62 versus $1.26 a year ago. Please direct your attention to the boxed section of the schedule where we have provided earnings information adjusted to exclude special items. As referenced in the footnote, first quarter results in 2010 have been adjusted to exclude the after tax impact of the gain from net litigation matters. Net earnings on an adjusted basis were $3.6 billion and earnings per share were $1.29 up 3.1% and 2.4% respectively versus the first quarter 2009.

I would now like to make some additional comments relative to the components leading to earnings before we move on to segment highlights. Cost of goods sold at 29% of sales was 70 basis points higher than the same period in 2009 primarily due to product mix in the pharmaceutical business. Selling, marketing and administrative expenses at 30.5% of sales were down 20 basis points versus last year due to cost containment efforts. Our investment in research and development as a percent to sales was 10% similar to the first quarter 2009. Interest expense net of interest income of $81 million is the same as the first quarter 2009. Lower interest rates on our cash balanced offset the impact of higher cash balances.

Other income net of other expense was nearly $1.6 billion in the first quarter 2010 compared to $75 million in the same period last year. The 2010 results reflect the net litigation gain mentioned earlier. As a reminder this was excluded from adjusted earnings. Excluding special items, taxes were 24.4% in the first quarter 2010 versus 24.5% in the first quarter 2009.

Turning now to business segment highlights please refer to the supplementary sales schedule highlighting major products or business franchises. I’ll begin with the consumer segment. Worldwide consumer segment sales for the first quarter 2010 of $3.8 billion increased 1.5% as compared to the same period last year. On an operational basis sales declined 3.7% while the impact of currency was positive 5.2 point. US sales were down 9.6% while international sales grew 1.4% on an operational basis.

For the first quarter 2010 sales for the over the counter pharmaceuticals and nutritionals decreased 15% on an operational basis compared to the same period in 2009 with US sales down 25.3% and sales outside the US down 2.7% on an operational basis. Sales were impacted by the voluntary recall of certain OTC products announced in January compounded by a less severe cold and flu season.

Shipments throughout the quarter were lower than normal as the company took a very comprehensive approach to the investigation, remediation and resumption of production to insure these products met quality standards. The pace of restocking is accelerating and we are now approaching normal levels of production and shipment for the impacted products.

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